Reis, Ricardo (2017) Can the central bank alleviate fiscal burdens? . Centre for Macroeconomics, The London School of Economics and Political Science, London, UK.
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Abstract
Central banks affect the resources available to fiscal authorities through the impact of their policies on the public debt, as well as through their income, their mix of assets, their liabilities, and their own solvency. This paper inspects the ability of the central bank to alleviate the fiscal burden by in uencing different terms in the government resource constraint. It discusses five channels: (i) how in ation can (and cannot) lower the real burden of the public debt, (ii) how seignorage is generated and subject to what constraints, (iii) whether central bank liabilities should count as public debt, (iv) how central bank assets create income risk, and whether or not this threatens its solvency, and (v) how the central bank balance sheet can be used for fiscal redistributions. Overall, it concludes that the scope for the central bank to lower the fiscal burden is limited.
| Item Type: | Monograph (Working Paper) |
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| Official URL: | https://ideas.repec.org/ |
| Additional Information: | © 2017 The Author |
| Divisions: | Centre for Macroeconomics |
| Subjects: | H Social Sciences > HG Finance |
| JEL classification: | E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy (Targets, Instruments, and Effects) E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their Policies E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy Formation, Macroeconomic Aspects of Public Finance, Macroeconomic Policy, and General Outlook > E63 - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization |
| Date Deposited: | 25 Apr 2017 11:06 |
| Last Modified: | 15 Sep 2023 23:41 |
| Funders: | National Science Foundation |
| URI: | http://eprints.lse.ac.uk/id/eprint/74324 |
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